RSA Chief Executive Comments on US Airways

13 September 2004

Dr. David G. Bronner, chief
executive of the Retirement Systems of Alabama (RSA), said today that the
decision by the US Airways Board of Directors to file for Chapter 11
protection was a “difficult but necessary decision.“Dr. Bronner serves as non-executive chairman of the US Airways Board of
Directors, and RSA holds a 36.2 percent stake in US Airways, as the result
of its $240 million equity investment in the company when it emerged from
a previous Chapter 11 reorganization in 2003. Dr. Bronner will continue to
serve as chairman of the board during the judicial restructuring.

“I remain convinced that a restructured US Airways with competitive costs
and its route network focused on the eastern half of the U.S. and the
Caribbean is an attractive investment,” said Dr. Bronner. “Unfortunately,
the airline industry changed dramatically at about the same time as RSA
made its investment. While the airline has done a lot of things right
since it emerged from Chapter 11 last year, the business plan that we
thought would succeed proved to be insufficient as low-cost carriers have
turned the industry on its head over the past year.”

Dr. Bronner said it has been terribly frustrating as US Airways’ chairman
to watch as management and labor have been unable to resolve their
differences and reach new labor agreements. “I believe that the labor
representatives sitting on the Board of Directors clearly understand the
challenges the company faces, and I know with certainty that the
management team is doing everything it can. I have tremendous empathy for
US Airways employees who are dealing with the changes in the industry, but
the reality is that US Airways must transform into a low-cost carrier. And
to be a low-cost carrier means the airline has to have low costs, and that
includes labor costs,” said Bronner.

“The reluctance of union negotiators to agree to concessions is
understandable, but their refusal to acknowledge the realities of the
airline industry is a mystery. There are thousands of jobs at stake, but
if any of them are going to be saved, then all employees are going to have
to make sacrifices, as difficult as that might be,” said Bronner. “There
is only one way for the company to emerge from Chapter 11, and that
involves lower costs, including lower labor costs.”

It is uncertain whether RSA will recover any or all of its investment in
US Airways, but Dr. Bronner said that the $240 million investment
represents less than one percent of RSA’s total portfolio. “The public
service employees and retirees have been well served by our overall
investment strategies over the years, and our track record has resulted in
changing a 25 percent funded system with $500 million in assets to a 91
percent funded system with $25 billion in assets, which means a safe and
secure pension for RSA members,” said Bronner. “RSA has been an active
investor in the aviation business for over 25 years, and that has
benefited the state in numerous ways, including our public pension funds.
It is a tough business, but there are ways to make money in the airline
industry. It is obvious, however, that low costs are the name of the game.” ——-